Money just sitting in a deposit account drawing very little interest or especially just sitting and drawing no interest is worth LESS over time due to inflation. $1000 invested in an S&P index fund (approx 10% return a year) 50 years ago would be worth over $116k today, minus any fees.
That's a good return rate JR, but it's 50 years and comparing to a house for example we would have to deduct the rent value of us living there because in fact the house is gaining value and we are living there "for free".
In that case you have the rent costs of living in your house, making it more expensive BUT you also have the benefit of living in the house, while if you had put the money into the fund you wouldn't have either the money available or the house to live in
LOL, that's confusing now, if it's your place you do not pay rent, you are just saying it so that we can see what's more profitable right, real estate or an investment? It really depends on the investment of course...
My point was that money itself is generally worth less over time. Money invested wisely is worth more than it was originally - as long as your investments outpace inflation. $1000 that just sat in a hole in the back yard or under the matress for the last 50 years is worth less than $150 now if you assume a 2% inflation rate during that time. The point is to wisely invest most of your money rather than just hide it or even have very much of it sitting in deposit accounts most of the time.
Yeah, I know that, but at the same that there is always the fear factor meaning, if we don't have much money we just might feel more comfortable having it around for a rainy day than investing it with the risk of losing it all.
That fear factor can happen from people that are not familiar with the stock market or investment world because people usually fear what they don't know, but at the same time they don't bother to know more about it, a nonsense really.
I think that first at all if we are buying for ourselves we should buy something we love, if we are buying as an investment we should really study the area and try to understand if we can make a profit with it or not.
This is a good point, and one of the main reasons I am trying to figure out how to invest intelligently now. No matter where you get your advice from (if its reputable) they will tell you the same thing. To build wealth you need to invest it. That sentiment goes back to the Biblical epoch, and the parable of the tenets.
No way around that, if you don't invest you won't get rich. Buying a house it's a conservative investment if you're buying your own place, if you have the capital you might buy more than one house.
